The Party's Over as US Government Seizes Control of Citigroup Expenses (James Doran)

Thursday 1 January 2009 20.52 GMT-- The US government has seized control of Citigroup's staff Christmas party budget and set tight restrictions on the use of its corporate jet in exchange for its $45bn (£28bn) bail-out.

The measures are among a raft of restrictions on expenses detailed in the small print of filing made by Citi on New Year's Eve with the US financial regulator, the Securities and Exchange Commission.{xtypo_quote_right} Citigroup has written a new expenses policy governing the use of the company's private jet and budgets for "entertainment and holiday parties". The bank has also set new policies to govern expenses for travel and accommodation, office renovations, the use of contractors and the purchase or lease of real estate. If the bank wants to make any material changes to the policy, it must seek permission from the treasury. {/xtypo_quote_right}

The filing was made to formalise restrictions on executive pay and bonuses that Citi's chief executive, Vikram Pandit, was forced to adopt in exchange for the US government bail-out, which includes guarantees on $306bn of troubled assets on top of $45bn of loans.

In a memo to staff, Pandit said he and the chairman, Sir Win Bischoff, would forgo year-end bonuses for 2008 after the huge banking group lost three-quarters of its market value and was forced to go cap in hand to the treasury. The government was granted a stake in Citigroup in exchange for the unprecedented bail-out.

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